Recent developments in Kerala state finances

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Abstract

This paper covers recent trends in a series of broad indicators of
the financial health of the Government of Kerala with its developmental
policy as the backdrop. It examines fiscal balances in Kerala that are not
only important for macroeconomic reasons and Finance Commission
mandated incentives but also for its own fiscal sustainability, and
identifies revenue expenditures as the prime but not the sole determinant.
The paper notes improvements in several fiscal indicators in the areas of
indebtedness and expenditure pattern but relative stagnation in revenue
mobilisation; it concludes that further fiscal consolidation is both
necessary and feasible, pointing out some broad measures to achieve
the same.
Keywords: Kerala, state finances, deficits, expenditure pattern, fiscal
liabilities, taxation
JEL Classification: H7, H81, O23